[¶12,056] In the Matter of The Commercial Bank of Volusia County, Ormond
Beach, Florida, Docket No. 03-050b (6-5-03).

A cease and desist order was issued, based on findings by the FDIC that
it had reason to believe that respondent was engaged in unsafe and
unsound practices. (This order was terminated by order of the
FDIC dated 3-15-05; see ¶16,413.)

In the Matter of
THE COMMERCIAL BANK OF VOLUSIA COUNTYORMOND BEACH, FLORIDA(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

FDIC-03-050b

The Commercial Bank of Volusia County, Ormond Beach, Florida
("Bank"), having been advised of its right to a Notice of Charges
and of Hearing detailing the unsafe or unsound banking practices and
violations of applicable laws and/or regulations alleged to have been
committed by the Bank and of its right to a hearing on the alleged
charges under section 8(b)(1) of the Federal Deposit Insurance Act
("Act"), 12 U.S.C. §1818(b)(1), and having waived those
rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN
ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with counsel for
the Federal Deposit Insurance Corporation ("FDIC") and with a
representative of the Florida Office of Financial Institutions and
Securities Regulation ("OFISR"), dated May 16, 2003. The OFISR
may issue an order to cease and desist pursuant to Fla. Stat. Ch. 655,
§655.033. Solely for the purpose of this proceeding and without
admitting or denying any of the charges of unsafe or unsound banking
practices and violations of laws and/or regulations, the Bank has
consented to the issuance of an ORDER TO CEASE AND DESIST
("ORDER") by the FDIC and the OFISR.

The FDIC and the OFISR considered the matter and determined that there
is reason to believe that the Bank had engaged in unsafe or unsound
banking practices and had committed violations of laws and regulations.
The FDIC and the OFISR, therefore, accepted the Consent Agreement and
issued the following:

ORDER TO CEASE AND DESIST

It is HEREBY ORDERED, that the Bank, its institution-affiliated
parties, as that term is defined in section 3(u) of the Act, 12 U.S.C.
§1813(u), and its successors and assigns cease and desist from the
following unsafe and unsound banking practices and violations of law
and/or regulations:

1. Operating with inadequate management;

2. Operating with inadequate equity capital in relation to the volume
and quality of assets held by the Bank;

3. Operating with a large volume of poor quality loans;

4. Operating with an inadequate allowance for loan and lease losses;

5. Following hazardous lending and lax collection practices;

6. Following hazardous practices with regards to management of interest
rate risk;

7. Operating in such a manner as to produce operating losses; and

8. Operating in violation of laws and/or regulations as more fully
described on pages 919 of the FDIC Report of Examination dated
October 21, 2002 (the "Report").

IT IS HEREBY ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns take affirmative action as
follows:

Within 90 days of the effective date of this ORDER, the Bank shall
have and retain qualified management.

(a) Each member of management shall have qualifications and
experience commensurate with his or her duties and responsibilities at
the Bank. At a minimum, management shall include the following:

(1) a chief executive officer with proven ability in managing a
bank of comparable size and in effectively implementing lending,
investment and operating policies in accordance with sound banking
practices;

(4) restore all aspects of the Bank to a safe and sound condition,
including asset quality, capital adequacy, earnings, sensitivity to
interest rate risk, management effectiveness, and risk management.

(c) During the life of this ORDER, the Bank shall notify the
Regional Director of the FDIC's Atlanta Regional Office ("Regional
Director") and the Director of OFISR ("Director")
(collectively, "Supervisory Authorities") in writing when it
proposes to add any individual to the Bank's board of directors
("Board") or employ any individual as a senior executive officer,
as that term is defined in Part 303 of the FDIC's Rules and
Regulations, 12 C.F.R. §303.102. The notification should include a
description of the background and experience of the individual or
individuals to be added or employed and must be received at least 30
days before such addition or employment is intended to become
effective. If the Regional Director issues a notice of disapproval
pursuant to section 32 of the Act, 12 U.S.C. §1831i, with respect to
any proposed individual, then such individual may not be added or
employed by the Bank.

(d) To facilitate compliance with Paragraph 1 (a), the Board shall, in
no more than 30 days from the effective date of this ORDER, develop and
approve a written analysis and assessment of the Bank's management and
staffing needs ("Management Plan"), which shall include, at a
minimum:

(1) identification of both the type and number of officer
positions needed to manage and supervise properly the affairs of the
Bank;

(2) identification and establishment of such Bank committees as are
needed to provide guidance and oversight to active management;

(3) evaluation of each Bank officer, and in particular the chief
executive officer, chief lending officer, and the chief operating
officer to determine whether these individuals possess the ability,
experience and other qualifications required to perform present and
anticipated duties, including adherence to the Bank's established
policies and practices, and maintenance of the Bank in a safe and sound
condition; and

(4) a plan of action to recruit and hire any additional or replacement
personnel with the requisite ability, experience and other
qualifications, which the Board determines are necessary to fill Bank
officer or staff member positions consistent with the Management Plan
as provided in this paragraph and other parts of this ORDER.

The written Management Plan and any subsequent modification
thereto shall be submitted to the Supervisory Authorities for review
and comment. No more than 30 days from the receipt of any comment from
the Supervisory Authorities, and after consideration of such comment,
the Board shall approve the written Management Plan and/or any
subsequent modification. Such Management Plan and its implementation
shall be satisfactory to the Supervisory Authorities as determined at
their initial review and at subsequent examinations and/or visitations.

(e) (1) The written Management Plan shall also include the
requirement that the Board, or a committee thereof consisting of not
less than a majority of the individuals who are independent with
respect to the Bank, provide supervision sufficient to ensure that the
Bank complies with the provisions of this ORDER.

(2) For purposes of this ORDER, an individual who is "independent
with respect to the Bank" shall be any individual (A) who is not an
officer of the Bank or any of its affiliated organizations and who does
not own more than 5 percent of the outstanding shares of the Bank, (B)
who is not related by blood, marriage or common financial interest to
any officer of the Bank or to any stockholder owning more than 5
percent of the Bank's outstanding shares, and (C) who is not indebted
to the Bank, directly or indirectly (including indebtedness of any
entity in which the individual has a substantial financial interest),
in an amount exceeding 5 percent of the Bank's Tier 1 capital and
allowance for loan and lease losses.

(a) From the effective date of this ORDER, the Board shall
increase its participation in the affairs of the Bank, assuming full
responsibility for the approval of sound policies and objectives and
for the supervision of all of the Bank's activities, consistent with
the role and expertise commonly expected for directors of banks of
comparable size. This participation shall include meetings to be held
no less frequently than monthly. The Board shall prepare in advance and
follow a detailed written agenda at each meeting, which shall, at a
minimum, include the review and approval of: the actions of any
committees; reports of income and expenses; new, overdue, renewal,
insider, charged-off, and recovered loans; investment activity;
operating policies; and individual committee actions. Detailed written
minutes of all Board meetings shall be maintained and recorded on a
timely basis fully documenting the Board's review, discussion and
approval of all agenda items and any other matters discussed at the
meeting and shall include the names of any dissenting directors on any
matter.

(b) Within 30 days from the effective date of this ORDER, the Board
shall develop and adopt a written educational program for each member
of the Board. The educational program shall include, at a minimum:

(1) specific training in the areas of lending, operations, and
compliance with all applicable Federal and Florida laws, rules and
regulations or statements of policy, including, but not limited to
laws, rules and regulations or statements of policy pertaining to
restrictions on insider transactions;

(2) specific training in the duties and responsibilities of the Board
in connection with the safe and sound operation of the Bank; and

(3) provision for periodic training.

This educational program shall be submitted to the Supervisory
Authorities for review within 30 days from the effective date of this
ORDER. The educational program shall be satisfactory to the Supervisory
Authorities at their initial review and as determined at subsequent
examinations and/or visitations. The Board shall document the training
activities in the minutes of the next Board meeting following
completion of the training.

(c) Within 30 days of the effective date of this ORDER, the Bank shall
designate a directors' committee to review and approve loans, with
such committee being structured so that a majority of its members are
persons who are not actively involved in the Bank's lending
activities.

(a) By July 15, 2003, the Bank shall increase Tier 1 capital by
not less than One Million Dollars ($1,000,000.00) and shall have Tier 1
capital in such an amount as to equal or exceed 7.5 percent of the
Bank's total assets. Thereafter, during the life of this ORDER, the
Bank shall maintain Tier 1 capital in such an amount as to equal or
exceed 7.5 percent of the Bank's total assets.

(b) By June 30, 2003, the Bank shall develop and adopt a plan to have
risk-based capital, as described in the FDIC Statement of Policy on
Risk-Based Capital contained in Appendix A to Part 325 of the FDIC's
Rules and Regulations, 12 C.F.R. Part 325, Appendix A, in such an
amount as to equal or exceed 10 percent. The plan shall be in a form
and manner acceptable to the Supervisory Authorities as determined at
subsequent examinations and/or visitations.

(c) The level of Tier 1 capital to be maintained during the life of
this ORDER pursuant to subparagraph 3(a) shall be in addition to a
fully funded allowance for loan and lease losses, the adequacy of which
shall be satisfactory to the Supervisory Authorities as determined at
subsequent examinations and/or visitations.

(d) Any increase in Tier 1 capital necessary to meet the requirements
of Paragraph 3 of this ORDER may be accomplished by the following

(1) sale of common stock;

(2) direct contribution of cash by the Board, shareholders, and/or the
parent holding company; or

(3) other means acceptable to the Supervisory Authorities.

Any increase in Tier 1 capital necessary to meet the requirements
of Paragraph 3 of this ORDER may NOT be accomplished through a
deduction from the Bank's allowance for loan and lease losses.

(e) For the purposes of this ORDER, the terms "Tier 1 capital"
and "total assets" shall have the meanings ascribed to them in
Part
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325 of the FDIC's Rules and Regulations, 12 C.F.R. §§ 325.2(t)
and 325.2(v).

(f) If all or part of any necessary increase in Tier 1 capital required
by this Paragraph is accomplished by the sale of new securities, the
Board shall forthwith take all necessary steps to adopt and implement a
plan for the sale of such additional securities, including the voting
of any shares owned or proxies held or controlled by them in favor of
the plan. Should the implementation of the plan involve a public
distribution of the Bank's securities (including a distribution
limited only to the Bank's existing shareholders), the Bank shall
prepare offering materials fully describing the securities being
offered, including an accurate description of the financial condition
of the Bank and the circumstances giving rise to the offering, and any
other material disclosures necessary to comply with any applicable
securities laws. Prior to the implementation of the plan and, in any
event, not less than 15 days prior to the dissemination of such
materials, the plan and any materials used in the sale of the
securities shall be submitted to the FDIC, Registration and Disclosure
Section, 550 17th Street, N.W., Washington, D.C. 20429, and the OFISR
for review. Any changes requested to be made in the plan or materials
shall be made prior to their dissemination.

(g) In complying with the provisions of Paragraph 3 of this ORDER, the
Bank shall provide to any subscriber and/or purchaser of the Bank's
securities, a written notice of any planned or existing development or
other changes which are materially different from the information
reflected in any offering materials used in connection with the sale of
Bank securities. The written notice required by this Paragraph shall be
furnished within 10 days from the date such material development or
change was planned or occurred, whichever is earlier, and shall be
furnished to every subscriber and/or purchaser of the Bank's
securities who received or was tendered the information contained in
the Bank's original offering materials.

Within 10 days from the effective date of this ORDER, the Bank
shall eliminate from its books, by charge-off or collection, all assets
or portions of assets classified "Loss" in the Report not
previously collected or charged-off. Elimination of these assets
through proceeds of other loans made by the Bank is not considered
collection for purposes of this paragraph.

(a) By September 30, 2003, the Bank shall have reduced the assets
classified "Substandard" in the Report to not more than
$1,750,000.

(b) By December 31, 2003, the Bank shall have reduced the assets
classified "Substandard" in the Report to not more than
$1,300,000.

(c) By March 31, 2004, the Bank shall have reduced the assets
classified, "Substandard" in the Report to not more than
$750,000.

(d) The requirements of subparagraphs 6(a), 6(b), and 6(c) of this
ORDER are not to be construed as standards for future operations and,
in addition to the foregoing; the Bank shall eventually reduce the
total of all adversely classified assets. Reduction of these assets
through proceeds of other loans made by the Bank is not considered
collection for the purpose of this paragraph. As used in subparagraphs
6(a), 6(b), and 6(c) the word "reduce" means:

(1) to collect;

(2) to charge-off; or

(3) to sufficiently improve the quality of assets adversely classified
to warrant removing any adverse classification, as determined by the
Supervisory Authorities.

Within 60 days of the effective date of this ORDER, the Bank shall
submit to the Supervisory Authorities a written plan to effect the
reduction and/or improvement of any lines of credit adversely
classified by the Supervisory Authorities as of October 21, 2002, and
which aggregate $100,000 or more as of that date. Such plan shall
thereafter be monitored and progress reports thereon resubmitted by the
Bank at 90-day
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intervals concurrently with the other reporting
requirements set forth in Paragraph 18 of this ORDER.

(a) Beginning with the effective date of this ORDER, the Bank
shall not extend, directly or indirectly, any additional credit to, or
for the benefit of, any borrower who has a loan or other extension of
credit from the Bank that has been charged off or classified, in whole
or in part, "Loss" or "Doubtful" and is uncollected. The
requirements of this paragraph shall not prohibit the Bank from
renewing (after collection in cash of interest due from the borrower)
any credit already extended to any borrower.

(b) Additionally, during the life of this ORDER, the Bank shall not
extend, directly or indirectly, any additional credit to, or for the
benefit of, any borrower who has a loan or other extension of credit
from the Bank that has been classified, in whole or part,
"Substandard" and is uncollected.

(c) Paragraph 8(b) shall not apply if the Bank's failure to extend
further credit to a particular borrower would be detrimental to the
best interests of the Bank. Prior to the extending of any additional
credit pursuant to this paragraph, either in the form of a renewal,
extension, or further advance of funds, such additional credit shall be
approved by a majority of the Board or a designated committee thereof,
who shall certify in writing as follows:

(1) why the failure of the Bank to extend such credit would be
detrimental to the best interests of the Bank;

(2) that the Bank's position would be improved thereby; and

(3) how the Bank's position would be improved.

The signed certification shall be made a part of the minutes of
the Board or its designated committee and a copy of the signed
certification shall be retained in the borrower's credit file.

(a) Within 60 days from the effective date of this ORDER, the Bank
shall develop and adopt an internal loan review and grading system to
provide for the periodic review of the Bank's loan portfolio in order
to identify and categorize the Bank's loans, and other extensions of
credit carried on the Bank's books as loans, on the basis of credit
quality. The Bank shall also within 60 days from the effective date of
this ORDER, submit the written internal loan review and grading system
to the Supervisory Authorities for review. Such system and its
implementation shall be satisfactory to the Supervisory Authorities as
determined at their initial review and at subsequent examinations
and/or visitations. At a minimum, the grading system shall require the
following:

(1) specification of standards and criteria for assessing the
credit quality of the Bank's loans;

(2) application of loan grading standards and criteria to the Bank's
loan portfolio;

(3) categorization of the Bank's loans into groupings based on the
varying degrees of credit and other risks which may be presented under
the applicable grading standards and criteria, but in no case, will a
loan be assigned a rating higher than that assigned by examiners at the
last examination of the Bank without prior written notification to the
Supervisory Authorities;

(4) assessment of the likelihood that each loan exhibiting credit and
other risks will not be repaid according to its terms and conditions;

(5) identification of any loan that is not in conformance with the
Bank's loan policy;

(6) identification of any loan which presents any unsafe or unsound
banking practice or condition or is otherwise in violation of
applicable Federal and Florida laws, regulations, or statements of
policy; and

(7) preparation of a written report to be made to the Bank's Board and
Audit Committee, not less than quarterly after the effective date of
this ORDER. The report shall identify the status of those loans which
exhibit credit and other risks under the applicable grading
standards/criteria and the prospects for full collection and/or
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strengthening of the quality of any such loans.

(b) The Bank shall also hire, appoint, or contract with a
qualified individual to administer the internal loan review and grading
system. The qualifications of this individual shall be assessed on the
following:

(1) training in loan review/examination procedure;

(2) knowledge of loan documentation requirements;

(3) loan review/examination experience;

(4) ability to comply with the requirements of this ORDER and the
Bank's written loan and loan review policies; and

Within 60 days from the effective date of this ORDER, the Bank
shall revise, adopt, and implement a written lending and collection
policy to provide effective guidance and control over the Bank's
lending function, which policy shall include, at a minimum, revisions
to address all items of criticism enumerated on pages 6 and 7 of the
Report, including, but not limited to, those criticisms pertaining to
overdraft policies and procedures and supervision and control of
insider transactions. Such policy and its implementation shall be in a
form and manner acceptable to the Supervisory Authorities as determined
at subsequent examinations and/or visitations.

Within 30 days from the effective date of this ORDER, the Board
shall review the adequacy of the allowance for loan and lease losses
("allowance") and establish a comprehensive policy for
determining the adequacy of the allowance for loan and lease losses.
For the purpose of this determination, the adequacy of the allowance
shall be determined after the charge-off of all loans or other items
classified "Loss". The policy shall provide for a review of the
allowance at least once each calendar quarter. Said review should be
completed at least ten (10) days prior to the end of each quarter, in
order that the findings of the Board with respect to the allowance for
loan and lease losses may be properly reported in the quarterly Reports
of Condition and Income. The review should focus on the results of the
Bank's internal loan review, loan and lease loss experience, trends of
delinquent and non-accrual loans, an estimate of potential loss
exposure of significant credits, concentrations of credit, and present
and prospective economic conditions. A deficiency in the allowance
shall be remedied in the calendar quarter it is discovered, prior to
submitting the Report of Condition, by a charge to current operating
earnings. The minutes of the Board meeting at which such review is
undertaken shall indicate the results of the review. The Bank's policy
for determining the adequacy of the Bank's allowance and its
implementation shall be satisfactory to the Supervisory Authorities as
determined at subsequent examinations and/or visitations.

(a) Within 60 days from the effective date of this ORDER, the Bank
shall formulate and implement a written plan to improve earnings. This
plan and any subsequent modification thereto shall be submitted to the
Supervisory Authorities for review and comment and shall address, at a
minimum, the following:

(1) goals and strategies for improving and sustaining the
earnings of the Bank;

(2) the major areas in, and means by which, the Board will seek to
improve the Bank's operating performance;

(3) realistic and comprehensive budgets;

(4) a budget review process to monitor the income and expenses of the
Bank to compare actual performance with budgetary projections;

(5) the operating assumptions that form the basis for, and adequately
support, major projected income and expense components; and

(6) coordination of the Bank's loan, investment, and operating
policies, and budget and profit planning, with the funds management
policy.

(b) Following the end of each calendar quarter, the Board shall
evaluate the Bank's actual performance in relation to the plan
required by this paragraph and shall record
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the results of the
evaluation, and any actions taken by the Bank, in the minutes of the
Board meeting at which such evaluation is undertaken.

(c) Thereafter, the Bank shall formulate such a plan and budget by
November 30 of each subsequent year. These plans and budgets shall be
submitted to the Supervisory Authorities for review and comment by
December 15 of each subsequent year.

Within 90 days from the effective date of this ORDER, the Bank
shall prepare and submit to the Supervisory Authorities its written
strategic plan consisting of long-term goals designed to improve the
condition of the Bank and its viability and strategies for achieving
those goals. The plan shall be in a form and manner acceptable to the
Supervisory Authorities as determined at subsequent examinations and/or
visitations, but at a minimum shall cover three years and provide
specific objectives for asset growth, market focus, earnings
projections, capital needs, and liquidity positions.

Within 60 days of the effective date of this ORDER, the Board
shall develop and implement a written policy for managing interest rate
risk in a manner that is appropriate to the size of the Bank and the
complexity of its assets. The policy shall comply with the Joint Agency
Policy Statement on Interest Rate Risk, shall be consistent with the
comments and recommendations detailed in the Report and shall include,
at a minimum, the means by which the interest rate risk position will
be monitored, the establishment of risk parameters, and provisions for
periodic reporting to management and the Board regarding interest rate
risk with adequate information provided to assess the level of risk.
The Bank shall also within 60 days of the effective date of this Order,
submit the policy to the Supervisory Authorities for review and
comment. Such policy and its implementation shall be satisfactory to
the Supervisory Authorities as determined during their initial review
and at subsequent examinations and/or visitations.

Within 30 days from the effective date of this ORDER, the Bank
shall eliminate and/or correct all violations of law identified on
pages 9 through 19 of the Report. Provided, however, that any loans
violating the lending limits contained in Fla. Stat. Ch. 658,
§658.48(1)(a), shall be reduced to the lending limits required by
Florida law within 10 days from the effective date of this ORDER.
Additionally, the Bank shall take all necessary steps to ensure future
compliance with all applicable Federal and Florida laws, regulations
and statements of policy.

Within 30 days from the effective date of this ORDER, the Bank
shall develop, adopt, and implement a written policy designed to bring
any potential conflicts of interest to the attention of the Board when
it is considering direct or indirect loans or other transactions where
officers, directors or principal shareholders of the Bank
("Insiders") are involved. Such policy shall, at a minimum,
ensure that the Board has been apprised of any potential conflict prior
to making a decision, or acting specifically on any loan or other
transaction directly or indirectly involving Insiders and/or their
business associates. The results of any deliberations by the Board
regarding potential conflicts shall be reflected in the minutes of its
meetings.

Following the effective date of this ORDER, the Bank shall send to
its shareholders or otherwise furnish a description of this ORDER in
conjunction with the Bank's next shareholder communication and also in
conjunction with its notice or proxy statement preceding the Bank's
next shareholder meeting. The description shall fully describe the
ORDER in all material respects. The description and any accompanying
communication, statement, or notice shall be sent to the FDIC,
Registration and Disclosure Section, 550 17th Street, N.W., Washington,
D.C. 20429, at least 15 days prior to dissemination to shareholders.
Any changes requested to be made by the FDIC shall be made prior to
dissemination of the description, communication, notice, or statement.

Within 30 days of the end of the first quarter following the
effective date of this ORDER, and within 30 days of the end of each
quarter thereafter, the Bank shall furnish written progress reports to
the Supervisory Authorities detailing the form and manner of any
actions taken to secure compliance with this ORDER
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and the results
thereof. Such reports shall include a copy of the Bank's Report of
Condition and the Bank's Report of Income. Such reports may be
discontinued when the corrections required by this ORDER have been
accomplished and the Supervisory Authorities have released the Bank in
writing from making further reports.

This ORDER shall become effective 10 days from the date of its
issuance.

The provisions of this ORDER shall remain effective and enforceable
except to the extent that, and until such time as, any provisions of
this ORDER shall have been modified, terminated, suspended, or set
aside by the Supervisory Authorities.

Pursuant to delegated authority.

Dated this 5th day of June, 2003

The Director, Office of Financial Institutions and Securities
Regulation having duly approved the foregoing ORDER, and the Bank,
through its Board, having agreed that the issuance of the said ORDER by
the FDIC shall be binding as between the Bank and the Office of
Financial Institutions and Securities Regulation to the same degree and
legal effect that such ORDER would be binding upon the Bank if the
Office of Financial Institutions and Securities Regulation had issued a
separate ORDER that included and incorporated all of the provisions of
the foregoing ORDER pursuant to Fla. Stat. Ch. 655, §655.033.